No June rate rise as markets dive

There is little or no chance of an interest rate rise in June according to economists. The share market and the Australian dollar fell sharply yesterday in response to international developments and deteriorating economic indicators in Australia. ”The cumulative rate hikes are eroding optimism,” said Commsec economist, Savanth Sebastian. ”Three hikes in a row, together with the government's response to the Henry Review, a weaker sharemarket and fall in the Aussie dollar have taken their toll.”

The RBA has raised rates six times since last October, including three consecutive rate hikes of 0.25 per cent each this year. ”We're now confident the Reserve Bank will remain on hold next month,” said Westpac economist Bill Evans. ”Its board now believes rates have returned to normal levels. Rates are now starting to bite. Retail spending, housing finance and even employment growth are slowing. The news from offshore is disturbing.”

Source: Sydney Morning Herald